Daily on Energy: Industry makes the case for Gulf of Mexico oil on emissions grounds

The findings: The study, ordered by the National Ocean Industries Association and performed by ICF, looked at the emission profiles of 103 countries to compare relative emissions intensities between them and regions in the U.S. and Canada. It also groups countries to make comparisons between entities, such as OPEC and OECD nations.

The Gulf of Mexico has a carbon intensity 46% lower than the global average outside of the U.S. and Canada, according to the report, beating out the emissions of other leading producers such as Russia, China, Brazil, Iran, Iraq, and Nigeria.

Gulf offshore production also produces lower emissions per barrel than any producing region in the U.S. with the exception of the Pacific Offshore, which is responsible for negligible production volumes.

“The world needs both climate solutions and a growing amount of energy, and we don’t have to choose between the two,” said NOIA president Erik Milito. “The Gulf of Mexico produces a massive amount of energy with a remarkably small footprint, and its continued success is critical for our energy security, national security, and energy affordability.”

Vs. onshore: Offshore production does not involve tree-clearing as can onshore production, giving the offshore an edge there. On the other hand, offshore wells require significantly more energy and material compared to onshore wells.

However, higher GHG values for offshore well construction “are offset by the higher well productivity for offshore wells,” according to the report, resulting in construction-related emissions per unit of production typically being lower for offshore wells as compared to onshore wells.

Methane emissions are also comparatively lower in the Gulf than U.S. onshore, the report found.

At 13.07 metric tons of CO2-equivalent per barrel, the Gulf offshore beats out every other nation on earth in emissions performance except one, and its superior is doozy.

Saudi Arabia: The oil giant’s averages 10.99 metric tons of CO2-e per barrel to lead the pack, according to ICF’s analysis.

Average emissions associated with well construction are substantially lower for Saudi Arabia compared to Gulf offshore operations, and the Saudis win big on production-related methane leak performance, too.

One caveat: And it’s big one. The U.S. has been scored with a higher environmental performance rating than Saudi Arabia.

Yale University’s Environmental Performance Index, published in February, rates U.S. liquid fuels production at a 51.1 for environmental performance compared to Saudi Arabia’s 37.9, although the U.S. ranks behind Norway, the United Kingdom, and another major OPEC producer: the UAE.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

BREAKING – BIDEN VETOES BILL TO BLOCK SOLAR TARIFF PAUSE: President Joe Biden vetoed legislation today that sought to block his pause on tariffs for solar panels manufactured in Cambodia, Malaysia, Thailand, and Vietnam, which collectively comprise roughly 80% of cell and module imports.

The White House praised the pause as helping end America’s reliance on China and helping create a domestic solar supply chain.

“Passage of this resolution bets against American innovation,” the White House said in the veto message. “It would undermine these efforts and create deep uncertainty for American businesses and workers in the solar industry.”

FOREST SERVICE APPROVES MVP’S TRANSIT ACROSS NATIONAL FOREST: The Forest Service issued a record of decision yesterday to allow the Mountain Valley Pipeline to cross portions of the Jefferson National Forest in Virginia and West Virginia.

Under the Mineral Leasing Act, the Bureau of Land Management must grant right-of-way and a temporary use permit authorizing for interstate pipelines that cross more than one Federal agency jurisdiction. The Forest Service is also required to concur where national forest lands are involved.

The concurrence represents a rewrite after the Fourth Circuit tossed previous authorizations by the Forest Service and BLM for MVP’s operations in the Jefferson National Forest.

MVP’s developers seek authorization to construct and operate an underground, 42-inch pipeline that would cross the JNF along a proposed 3.5-mile corridor.

The Forest Service’s concurrence requires that MVP comply with an associated Erosion and Sediment Control Plan as approved by the Virginia Department of Environmental Quality and by the West Virginia Department of Environmental Protection, along with a number of other terms and conditions.

Opponents of MVP, who have successfully challenged multiple of its authorizations to thwart its construction and operation, criticized the agency for giving the pipeline go-ahead.

“The Forest Service’s preferred alternative to allow MVP to rip through the Jefferson National Forest grossly underestimates the lasting environmental harms from the project, ignores the overwhelming public opposition to sacrificing this treasured land and shirks the agency’s responsibility to steward forests,” Jessica Sims, Virginia field coordinator for Appalachian Voices.

What’s left: The Fourth Circuit has upheld MVP’s Virginia water quality certification but just last month vacated MVP’s state water quality certification from West Virginia.

Mountain Valley Pipeline’s developers still lack authorizations from the U.S. Army Corps of Engineers and West Virginia Department of Environmental Protection, and litigation is pending against the Fish & Wildlife Service’s biological opinion for the project.

USDA ANNOUNCES CLEAN ENERGY FUNDING FOR RURAL AMERICA: The Department of Agriculture announced billions in new grants and loans designed to expand renewable energy installations and other clean energy technologies in rural regions.

USDA will provide $9.7 billion exclusively to eligible rural electric cooperatives to build renewable energy, carbon capture systems, and other zero-emissions technologies. Another $1 billion will be offered as partially-forgivable loans through the Powering Affordable Clean Energy program, made available for a wider range of entities, including corporations, co-ops, and investor-owned utilities.

USDA will begin taking letters of interest for the $11 billion in funding, which was authorized by the Inflation Reduction Act, later this summer.

MIDWESTERNERS PUSH ETHANOL ‘PARITY’ WITH RFS BILL: Midwestern lawmakers introduced legislation yesterday that aims to expand corn-based ethanol by allowing it to qualify as an advanced biofuel under the Renewable Fuel Standard.

The RFS includes blending obligations for multiple “buckets” of liquid biofuels, including conventional fuel (usually ethanol), cellulosic biofuel, biomass-based diesel, and advanced biofuels.

Blending of corn-based ethanol serves the conventional requirement, which is the largest within the RFS. The program expressly prohibits ethanol from cornstarch to go toward meeting the advanced biofuel volume requirements.

The lawmakers, led by Rep. Mariannette Miller-Meeks, want to change that with the Fuels Parity Act to allow corn-based ethanol to qualify as an advanced biofuel if it can meet the scientific threshold.

The threshold: To be an advanced biofuel, a liquid fuel must meet a 50% GHG reduction threshold per gallon of comparable fossil fuel. The requirement for conventional biofuel is lower at 20%.

Renewable Fuels Month: Staying in the Midwest, Sen. Pete Ricketts of Nebraska announced a resolution yesterday to dub May 2023 “Renewable Fuels Month” in America.

RECORD CHINESE DEMAND STRAINS OIL SUPPLY: The International Energy Agency raised its 2023 oil demand forecast by 200,000 barrels per day today, bringing expected global demand for the year to a record-high of 102 millions bpd. The bullish new forecast was underpinned in large part by China, which saw record-high demand as it reopens its economy following the COVID-19 pandemic.

Chinese demand increased to a record-high 16 million bpd in March, offsetting more sluggish demand from other countries. Despite a slight slip in demand in April, Beijing’s oil refinery throughput saw an 18.9% increase last month compared to the same point in 2022, the IEA said.

In total, the Paris-based agency forecasts China will account for a whopping 60% of global demand for the year. Other notable takeaways:

A supply crunch is likely: Market tightness will begin as early as this quarter, before reaching a projected defecit of 2 million bpd by December, the IEA said. That’s in large part due to OPEC+ production cuts that take effect beginning this month. Those cuts have been criticized by both IEA and the Biden administration, citing the expected market squeeze later this year.

Russian oil exports rose to a new post-invasion high: Russia exported 8.3 million bpd of crude oil and refined oil products in April, the highest amount since its invasion of Ukraine early last year. Per the IEA, the spike in activity means Moscow may not be following through on its pledged production cut of 500,000 bpd in response to the G-7 oil price cap.

Roughly 80% of its oil exports are routed to China and India, per the IEA.

…EU LEADERS CALLS FOR CRACKDOWN OF REFINED PRODUCTS FROM INDIA: EU foreign policy chief Josep Borrell called today for the bloc to crack down on purchasing refined petroleum products from India that are made from Russian crude, calling for leaders to target any suspected buyers of refined Russian oil.

“If diesel or gasoline is entering Europe … coming from India and being produced with Russian oil, that is certainly a circumvention of sanctions and member states have to take measures,” Borrell told the Financial Times in an interview.

Borrell said he plans to raise the issue with his Indian counterpart, Subrahmanyam Jaishankar, when the two meet later today.

Why it matters: India has emerged as a top buyer of heavily-discounted Russian crude since the start of the war, and has significantly ramped up its exports of refined products, such as diesel and jet fuel, to the EU during the same period—which are sold at full price.

FIRE AT MARATHON TEXAS REFINERY LEAVES ONE DEAD: Marathon Petroleum said it is conducting an investigation into a fire that broke out yesterday at its Texas City refinery, resulting in the death of at least one employee and leaving two others hospitalized for their injuries.

Scott Higgins, a machinist at the company who had been nearing retirement, was taken to a nearby hospital and died as a result of injuries caused by the blaze, people familiar with the incident told Reuters. The status of the two other hospitalized employees is unknown.

The fire broke out around 9:30 a.m. local time and lasted for around four hours before it was extinguished, company officials said.

The three employees had been conducting routine maintenance work on the refinery’s largest reformer, the Ultraformer 3 (UU-3), when a nearby pump seal failed and caused the fire to erupt.

Both Marathon and the U.S. Occupational Safety and Health Administration (OSHA) have opened investigations into the incident, and other federal and local probes are expected to be announced in the coming days.

MENENDEZ INTRODUCES NEW BILL TO STOP NYC CONGESTION PRICING PLAN: Sen. Bob Menendez announced new legislation yesterday aimed at addressing New York’s controversial congestion pricing tax, which would charge drivers up to $23 per day to enter Manhattan’s Central Business District.

The bill, the “STOP NJ CONGESTION Act,” would impose new highway sanctions on New York or any other state that implements the tolling program, causing New York to lose roughly 50% of its funding from the National Highway Performance Program and from the Surface Transportation Block Grant Program.

The bill would also amend the program New York is using to implement the congestion pricing plan to require that any sponsors “meaningfully engage” and secure consent from states that might be affected by such pricing proposals.

Also this week, Menendez and fellow Garden Stater Sen. Cory Booker sent a letter to Transportation Secretary Pete Buttigieg calling on the agency to pursue a full Environmental Impact Statement, or EIS, which would ensure input from others, including New Jersey.

CASSIDY PREVIEWS BIPARTISAN CLIMATE-TRADE BILL: Republican Sen. Bill Cassidy said he is working on legislation designed to slow climate change by reducing global emissions while combating Chinese economic strength and protecting U.S jobs that rely on fossil fuels.

Cassidy, in remarks this morning during a virtual event hosted by sustainable investment nonprofit Ceres, said the bill will address the nexus between facilitating economic growth in the U.S., global emissions, and national security.

“We have a paradox — my state does — the most impacted by rising sea levels and the most dependent upon producing those products that we associate with fossil fuels,” Cassidy said of Louisiana.

All about CBAM — and China: A pillar of the legislative effort is a carbon border adjustment mechanism, or a “foreign pollution fee,” something Cassidy has been pushing for for some time. It’s designed to price in the cost of pollution and level the cost between steel and other products produced in the U.S. and those produced in other countries, especially China.

Cassidy noted data showing rising greenhouse gas emissions in China outpacing the collective reductions achieved between the U.S. and EU.

“China uses this pollution, externalizing their pollution, as an economic development tool,” he said.

Path to 60 votes: The hope is to introduce a bill by year’s end, Cassidy said.

“By discussing the issue of lowering emissions in the context of improving our economy, and in the context of decreasing, relatively speaking, China’s economy, their military might, I can get 60 votes,” he said. “And it will come all the way from my national security hawk Republican on the right to my environmentalists who feels like climate change is a greater existential threat than China.”

The Rundown

Washington Examiner Biden launches workforce programs to boost green energy and manufacturing

Reuters Pro-nuclear countries pitch atomic role in Europe’s green transition

Politico ‘Green amendments’ clash with renewables in Western states